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Milk prices could rise if farm bill looms

By MARY CLARE JALONICK Associated Press

Posted:
12/05/2013 10:13:58 AM MST

Updated:
12/05/2013 03:12:44 PM MST

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From left, Senate Agriculture Committee Chair Den. Debbie Stabenow, D-Mich., House Agriculture Committee Chairman Rep. Frank Lucas, R-Okla., and Rep. Collin Peterson, D-Minn., ranking Democrat on the House Agriculture Committee, are intercepted by reporters after negations on the Farm Bill wrapped up on Capitol Hill in Washington, Wednesday, Dec. 4, 2013. There is agreement on many parts of the legislation but significant differences remain over funding for the Supplemental Nutrition Assistance Program, more commonly known as food stamps.

WASHINGTON—A New Year's deadline that could send the price of milk skyward looms over congressional negotiators as they try to reach agreement on a five-year farm bill. They've been tripped up by differences over the nation's food stamp program and how to restructure farm subsidies.

The two chambers have been far apart on both issues for more than two years. But the leaders of the House and Senate Agriculture committees expressed optimism after a private meeting Wednesday that they may be able to find resolution in time to narrowly avert the expiration of dairy subsidies on Jan. 1. If those subsidies expire, new laws will kick in that could result in decreased dairy supply on the commercial market and higher prices for a gallon of milk.

Rep. Mike Conaway of Texas, a Republican on the House-Senate farm bill conference committee, said negotiators could possibly hold a public meeting next week for the conference committee to settle some of the remaining issues before the House leaves for the year on Dec. 13. But with a final deal still elusive, it seems unlikely that Congress will finish the bill before the end of the year.

On Thursday, House Speaker John Boehner said the bill should be extended through January while negotiators work out their differences. Boehner also contradicted the optimism of House Agriculture Committee Chairman Frank Lucas, R-Okla., who said Wednesday that the two sides had made "great progress."

"You know, I've not seen any real progress on the farm bill," Boehner said.

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"And so if we've got to pass a one-month extension of the farm bill, I think we ought to be prepared to do that."

An extension is not certain, however. Senate Majority Leader Harry Reid, D-Nev., has said he doesn't want to extend the bill again after Congress already extended the bill at the beginning of this year.

Finding a compromise on cuts to the nation's $80 billion-a-year food stamp program has been the toughest obstacle over the last two years. The House passed a bill this summer that would cut $4 billion from food stamps—now known as the Supplemental Nutrition Assistance Program, or SNAP—annually and allow states to create new work requirements for some recipients. The Democratic Senate, backed by President Barack Obama, passed a farm bill with $400 million annual cut, or a tenth of the House cut.

Negotiators have discussed as a possibility cracking down further on a practice in some states of giving low-income people as little as $1 a year in home heating assistance, even when they don't have heating bills, in order to make them eligible for increased food stamp benefits. The Senate found its $400 million in annual cuts by requiring that recipients receive at least $10 in assistance to make them eligible, while the House doubled that cut by requiring that recipients receive $20 annually—bringing the savings to around $800 million a year.

It's unclear whether a compromise would include the new work requirements passed by the House, but the Senate is unlikely to go along with those proposals. The Senate has also balked at a House provision to end government waivers that have allowed able-bodied adults without dependents to receive food stamps indefinitely. That proposal has been particularly important to House Majority Leader Eric Cantor, R-Va.

White House spokesman Jay Carney reiterated Obama's support for the Senate version of the bill Thursday, calling the House SNAP cuts "unconscionable" and harmful to families across the country.

"The president has mentioned and made clear that there is an opportunity for bipartisan cooperation on a comprehensive farm bill," Carney said. "And he hopes and expects that that can be achieved before the end of the year."

Negotiators are also working out how farm subsidies should be restructured in the absence of a traditional subsidy called direct payments, which are paid to farmer regardless of crop price or crop yield. Both chambers' bills would eliminate this $5 billion annual subsidy in response to critics who say it pays farmers not to farm. But they have argued over how to replace those payments, with major farm groups squabbling over whether subsidies should kick in based on crop prices or farmer revenue, and how to count the acreage on which the subsidies are based.

Minnesota Rep. Collin Peterson, the top Democrat on the House Agriculture Committee, said negotiators had tentatively resolved some of those subsidy issues. But they are still waiting for analysis of how much their proposals would cost, a process that could take until next week.

If the negotiators can't agree on a bill and Congress allows the dairy supports to expire, 1930s and 1940s-era "permanent" farm law would go into effect. Those laws would raise the price that the government currently pays to purchase dairy products, prompting many processors to sell to the government instead of commercial markets. That would decrease commercial supply and consequently raise prices for shoppers at grocery stores.

Prices wouldn't go up immediately, as the Agriculture Department would have to write the new rules based on the old laws and then put them into place. But Agriculture Secretary Tom Vilsack is warning that it may not take that long, saying USDA was prepared to implement the dairy law in "short order" if current law expires.

"But boy, I tell you, that's not something that I want to do," Vilsack said. "I'm reasonably certain that's not anything that anybody in Congress would want to have happen, and I'm sure that no consumer is anxious to see that happen. So hopefully we continue to see progress."

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